Get your taxes done using TurboTax

Either use the amendment program to help you complete the 8949 & Sch D using the home sale worksheet or just respond to the IRS using the prior mentioned basic formula to explain why you do not owe what they say...

See this TurboTax FAQ for help with amending.

There may be no tax due.  For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

If you work through the interview on sale of a residence, Turbotax will compute the exclusion. Look under the wages and income tab for less common income, then sale of home.

I would only report the sale if:
    The gain exceeds the amounts that are exempt from tax, or
    You received a Form 1099-S from the closing agent.

A closing agent can get an affidavit or statement from you that the sale meets the requirements for exclusion and, if so, not send a Form 1099-S reporting the sale.  If the gain is fully excludible and you don't get a Form 1099-S, there is no reason to report the sale on your tax return.  If you do need to report it, use the following sequence:

     Federal Taxes, then
     Wages and income, then
     Choose what to work on, then
     Choose less common income, then
     Home Sale

Make sure to click this button ...